There has been a fall in the quantum of private equity investment in the real estate sector in the first three quarters of 2012, says the latest investment market report released by real estate consultancy, Cushman & Wakefield, India.

The private equity investment has been recorded at Rs.35 billion which is approximately 15 per cent lower than same period last year and the total number of private equity transactions so far this year stands at 23, marginally lower when compared to the same period last year.

Of the total investment this year so far, the first quarter saw majority of the investments at Rs.21 billion while the remaining two quarters recorded Rs.13.80 billion. While the second and third quarters depict a drop in investment volumes, the real estate sector continues to attract steady investments during the year.

Sanjay Dutt, Executive Managing Director-South Asia, Cushman & Wakefield, feels the reason for the fall in number of deals was mainly due to concerns on the government policy front coupled with an uncertain investment scenario, valuation and continued focus on exits for some vintage funds. “However, recent policy initiatives and opportunities in key markets should turn things around in the coming quarter and make up for the shortfall,” he says.

The residential segment witnessed the maximum private equity investments with the share of deals of the total private equity investments increasing by nine per cent in first three quarters of 2012 compared to 2011.

Most of the deals this year were executed through Special Purpose Vehicles (SPV) in contrast to last year where investments were witnessed in both entity and SPV level as they provide greater transparency and accountability along with ease of exit.

Mumbai continued to be the preferred destination for private equity investments followed closely by Bangalore and the NCR. However, their share had reduced from 84 per cent in the first three quarters of 2011 to 78 per cent in the same period this year. Other cities including Pune, Chennai and Hyderabad have witnessed steady interest from private equity investors, says the Cushman & Wakefield report.